The French Supreme Court (“Cour de cassation”) quashed the decision of the Paris Court of Appeals dated September 26, 2013 which held that a bank has the duty to inform its client of the way it is going to be remunerated

The decision handed down on September 26, 2013 by the Paris Court of Appeals in the matter opposing Société Générale to Société Minière Georges Montagnat (“SMGM”) ordered Société Générale to pay damages (USD 8 M) to SMGM for breach of its duty of information.

In its judgment dated March 17, 2015, the Cour de cassation quashed this decision and referred the parties before the same Court of Appeals differently composed.

In this case, the issue at stake was the setting-up by Société Générale, at the request of SMGM, of hedging transactions against a decline in the nickel price, in the form of zero-premium options. SMGM was challenging the underwriting and implementation conditions of these transactions.

The Cour de cassation ruled that the Court of Appeals breached article 1147 of the French civil Court by considering that the bank was bound by a duty to inform its client of the methods it was using to draw benefit from these transactions.